Correlation Between Carnegie Wealth and Djurslands Bank

Can any of the company-specific risk be diversified away by investing in both Carnegie Wealth and Djurslands Bank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Carnegie Wealth and Djurslands Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carnegie Wealth Management and Djurslands Bank, you can compare the effects of market volatilities on Carnegie Wealth and Djurslands Bank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Carnegie Wealth with a short position of Djurslands Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnegie Wealth and Djurslands Bank.

Diversification Opportunities for Carnegie Wealth and Djurslands Bank

-0.15

Correlation Coefficient

Carnegie Wealth  Djurslands Bank

Good diversification

The 3 months correlation between Carnegie and Djurslands is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Wealth Management and Djurslands Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Djurslands Bank and Carnegie Wealth is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Carnegie Wealth Management are associated (or correlated) with Djurslands Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Djurslands Bank has no effect on the direction of Carnegie Wealth i.e., Carnegie Wealth and Djurslands Bank go up and down completely randomly.

Pair Corralation between Carnegie Wealth and Djurslands Bank

Assuming the 90 days trading horizon Carnegie Wealth Management is expected to under-perform the Djurslands Bank. But the stock apears to be less risky and, when comparing its historical volatility, Carnegie Wealth Management is 1.12 times less risky than Djurslands Bank. The stock trades about -0.03 of its potential returns per unit of risk. The Djurslands Bank is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  52,500  in Djurslands Bank on October 4, 2024 and sell it today you would earn a total of  3,500  from holding Djurslands Bank or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

Carnegie Wealth Management  vs.  Djurslands Bank

Carnegie Wealth Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carnegie Wealth Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Carnegie Wealth is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Djurslands Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Djurslands Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Djurslands Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Carnegie Wealth and Djurslands Bank

The main advantage of trading using opposite Carnegie Wealth and Djurslands Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnegie Wealth position performs unexpectedly, Djurslands Bank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Djurslands Bank will offset losses from the drop in Djurslands Bank's long position.

The idea behind Carnegie Wealth Management and Djurslands Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.